March / April 2007 - Sacramento County Bar Association

Retirement
Preparing For Life
After Law
By Kim-An Hernandez and Dennis C. Huie
Asthe
baby boom generation enters the sexagenarian
era, so too burgeons a retirement revolution.
In the decade to come more than 75 million Americans will
pack up their offices and cash in their 401ks. Statistics suggest
that as many as 40,000 lawyers will enter retirement annually.
Here, we discuss some simple yet important issues every retiring
attorney should think about before taking the final plunge.
Your “degree” of retirement. The State Bar offers attorneys
three retirement options: (1) resignation; (2) inactive status; or
(3) continued active membership. Retirees eager to exit the
practice of law and relieve themselves of annual dues and
MCLE credits will find resignation a good fit. The retiree can
stay involved in other ways such as acting as a marketing consultant.
Increasingly, firms are employing their former partners
with valuable client contacts in this capacity.
Alternatively, inactive membership may be needed if an attorney
hopes to stay more involved in a non-counsel capacity as,
for example, a referee, hearing officer, court commissioner,
temporary judge, arbitrator or mediator.
Concern about future claims? The retiring attorney may
find solace in Labor Code § 2802 and/or Corporations Code
§ 317 (corporate employees). Both statutes require indemnification
for conduct occurring within the course and scope of
employment or arising out of corporate acts. However, these
statutes are not risk-free. For example, there is no express
coverage for former employees under Labor Code § 2802,
though courts have assumed the statute applies to former
employees. In addition, a retiree may be forced to pay for
defense costs unless and until he or she succeeds in defending
the claim. As a safety net, especially for non-employee
attorneys (i.e., partners), professional liability insurance
should be considered. Because professional liability insurance
plans are typically written on a “claims made” basis, covering
only claims made during the policy period, retiring
attorneys should consider purchasing extended liability tail
insurance to protect them come retirement.
What to do with your practice? Retirees must also decide
how best to dispose of their existing practice. One option is to
sell the practice under Professional Conduct Rule 2-300. Where
the sale contemplates the transfer of responsibility for work not
yet completed or client files, the attorney must provide clients
with 90 day written notice of the transfer and of their right to
retain other counsel and collect their files. Note that Rule 2-300
is not intended to authorize the piecemeal sale of a practice.
Transfer of individual client matters, where permitted, is governed
separately by Rule 2-200.
How do you handle client files? File retention following
a transfer of interest or dissolution is a subject of much
debate among California ethics authorities. Financial and/or
practical considerations may make extended retention difficult.
Retention practices are further complicated by documents
such as wills, testaments, contracts and deeds which
are separately protected and may be indestructible even under
sound policy. Consulting with an ethics lawyer before
destroying documents is key.
Kim-An Hernandez, a graduate of Vanderbilt University Law School,
represents management in labor and employment litigation throughout
California and is an associate with the Employment Law Department
of Hanna, Brophy, MacLean, McAleer & Jensen, LLP.
Dennis Huie, a graduate of University of Pacific, McGeorge School of
Law, represents management in labor and employment litigation
throughout California and supervises the Employment Law Department
for Hanna, Brophy, MacLean, McAleer & Jensen, LLP.
■ MARCH/APRIL 2007 SACRAMENTO LAWYER
19